Friday, September 07, 2007

Infrastructure Blues

Much has been said about the deteriorating state of modern infrastructure, especially in the US. One reason making it impossible to rebuild and upgrade everything is that much of the world’s modern infrastructure was built with cheap oil, but now oil goes for double the price. The energy to rebuild and upgrade everything, plus build planned new infrastructure, will be prohibitively expensive.

But now there is another reason. The subprime meltdown is creating a credit crunch that will severely restrict access to loans needed to finance infrastructure projects. So, paying the energy bill is only half the problem, as projects will find it hard just to come up with the money.